auditing notes (PDR)

# auditing notes (PDR) - r Numerator PDR is positively...

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I. Formula and its application PDR = AAR IR*CR Ex: IR=100%, CR=100%, AAR=5% PDR = 0.05 =0.05 = 5% 100%*100% Scenarios Change in PDR 1 . If IR↓, CR , AAR , PDR? 2 . If IR , CR↓, AAR , PDR? 3 . If IR↑, CR , AAR , PDR? 4 . If IR , CR↑, AAR , PDR? 5 . If IR , CR↓, AAR , PDR? 6 . If IR , CR , AAR↓, PDR? =unchanged II. How to solve the problems? 1. Mathematics approach Denominato
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Unformatted text preview: r Numerator PDR is positively changing with the denominator (AAR). PDR is inversely changing with the numerator (IR& CR). 2. Direct method Plug in the numbers directly, to see how PDR changes. For example, in scenario 1, CR=100%, AAR=5%, IR=60%, then PDR = 0.05 =0.083 = 8.3% 60%*100% So, if IR↓, CR , AAR , ∝ ∝ PDR ↑...
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